Mortgage rates inch above 5%

Sunday, December 27th, 2009

USA Today

McLEAN, Va. (AP) — The average fixed-rate for a 30-year mortgage climbed above 5% for the first time in two months, leading to a decline in mortgage applications.

The average fixed rate on a 30-year mortgage was 5.05% this week, up from 4.94% last week, Freddie Mac said Thursday. The last time rates were above 5% was the week ending Oct. 29, when they were 5.03%.

Mortgage rates have risen since they hit a record low of 4.71% the week of Dec. 3. They are closely tied to yields on long-term government debt, which have gone up since then.

Higher rates usually lead to a decrease in loan applications to purchase or refinance a home. Mortgage applications for purchases fell nearly 12% last week compared with the previous week, while refinance applications dropped 10%, the Mortgage Bankers Association said Wednesday.

A Federal Reserve program to buy $1.25 trillion in mortgage-backed securities has kept rates on 30-year mortgages around 5% this year. The program, designed to make home buying more affordable, is set to end next spring.

Freddie Mac collects mortgage rates each week from lenders around the country. Rates often fluctuate, even within a given day

The average rate on a 15-year fixed mortgage rose to 4.45% from 4.38% last week.

Rates on five-year, adjustable-rate mortgages averaged 4.4%, up from 4.37% last week. Rates on one-year, adjustable-rate mortgages rose to 4.38% from 4.34%.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans. The fee averaged 0.6 point for 15-year, five-year and one-year mortgages.

Copyright 2009 The Associated Press. All rights reserved

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